Question 1

Discuss the tax year in which an AMT adjustment is first required for an incentive stock option ISO).

Accepted Answer

For regular income tax purposes, no inco

Question 2

Kerri, who has AGI of $120,000, itemized her deductions in the current year.She incurred unreimbursed employee business expenses of $8,500.Kerri incurs a positive AMT adjustment of $2,400 in computing AMT.

Accepted Answer

A) True 
 B)False

Question 3

A LIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.

Accepted Answer

A) True 
 B)False

Question 4

What is the relationship between the regular income tax liability and the TMT?

Accepted Answer

If the TMT exceeds the regular

Question 5

Mitch, who is single and age 46 and has no dependents, had AGI of $100,000 this year.His potential itemized deductions were as follows.   What is the amount of Mitch's AMT adjustment for itemized deductions for 2018?

Accepted Answer

A) $10,000. 
B) $12,300. 
C) $16,300. 
D) $34,300. 
A) $10,000. 
B) $12,300. 
C) $16,300. 
D) $34,300.

Question 6

Steve records a tentative general business credit of $110,000 for the current year.His net regular tax liability before t general business credit is $125,000, and his tentative minimum tax is $100,000.Compute Steve's allowable general business credit for the year.

Accepted Answer

Steve's allowable ge

Question 7

The AMT calculated using the indirect method will produce a different amount than the AMT calculated using the direct method.

Accepted Answer

A) True 
 B)False

Question 8

In the current tax year, for regular tax purposes, Avery reports $65,000 of income and $190,000 of deductions from passive activities.For AMT purposes, the passive activity income amount is unchanged, but deductions from passive activities total $150,000. What is Avery's suspended passive loss for regular tax and for AMT purposes?

Accepted Answer

A) $0; $0. 
B) $40,000); $40,000). 
C) $125,000); $85,000). 
D) $190,000); $150,000). 
A) $0; $0. 
B) $40,000); $40,000). 
C) $125,000); $85,000). 
D) $190,000); $150,000).

Question 9

Benita expensed mining exploration and development costs of $500,000 incurred in the current tax year.She will be required to make negative AMT adjustments for each of the next ten years and a positive AMT adjustment in the current tax year.

Accepted Answer

A) True 
 B)False

Question 10

Without the foreign tax credit, double taxation would result when:

Accepted Answer

A) The United States taxes the U.S.-source income of a U.S.resident. 
B) A foreign country taxes the foreign-source income of a nonresident alien. 
C) The United States and a foreign country both tax the foreign-source income of a U.S.resident. 
D) Terms of a tax treaty assign income taxing rights to the U.S. 
A) The United States taxes the U.S.-source income of a U.S.resident. 
B) A foreign country taxes the foreign-source income of a nonresident alien. 
C) The United States and a foreign country both tax the foreign-source income of a U.S.resident. 
D) Terms of a tax treaty assign income taxing rights to the U.S.

Question 11

A small employer incurs $1,500 for consulting fees related to establishing a qualified retirement plan for its 75 employees.As a result, the employer may claim the credit for small employer pension plan startup costs for $750.

Accepted Answer

A) True 
 B)False

Question 12

AMT adjustments can be positive or negative, whereas AMT preferences always are positive.

Accepted Answer

A) True 
 B)False

Question 13

An employer's tax deduction for wages is affected by the work opportunity tax credit.

Accepted Answer

A) True 
 B)False

Question 14

Madge's tentative minimum tax TMT) is $112,000.Her regular income tax liability is $99,000.Madge's AMT is
$13,000.

Accepted Answer

A) True 
 B)False

Question 15

Qualified rehabilitation expenditures include the cost of acquiring the building, but not the cost of acquiring the land.

Accepted Answer

A) True 
 B)False

Question 16

Why does Congress see a need for a second tax system called the alternative minimum tax?

Accepted Answer

The AMT was enacted as a backup to the r

Question 17

Which, if any, of the following correctly describes the research activities credit?

Accepted Answer

A) The research activities credit is the greater of the incremental research credit, the basic research credit, or the energy research credit. 
B) If the research activities credit is claimed, no deduction is allowed for research and experimentation expenditures. 
C) The credit is not available for research conducted outside the United States. 
D) All corporations qualify for the basic research credit. 
E) None of the above is correct. 
A) The research activities credit is the greater of the incremental research credit, the basic research credit, or the energy research credit. 
B) If the research activities credit is claimed, no deduction is allowed for research and experimentation expenditures. 
C) The credit is not available for research conducted outside the United States. 
D) All corporations qualify for the basic research credit. 
E) None of the above is correct.

Question 18

Molly has generated general business credits over the years that have not been utilized.The amounts generated and not utilized follow:     In the current year, 2018, her business generates an additional $15,000 general business credit.In 2018, based on her tax liability before credits, she can utilize a general business credit of up to $20,000.After utilizing the carryforwards and the current year credits, how much of the general business credit generated in 2018 is available for future years?

Accepted Answer

A) $0. 
B) $1,000. 
C) $14,000. 
D) $15,000. 
E) None of the above. 
A) $0. 
B) $1,000. 
C) $14,000. 
D) $15,000. 
E) None of the above.

Question 19

The standard deduction is allowed for regular income tax purposes, but is disallowed for AMT purposes.This results in a positive AMT adjustment.

Accepted Answer

A) True 
 B)False

Question 20

Amber is in the process this year of renovating the office building placed in service in 1976) used by her business.Because of current Federal Regulations that require the structure to be accessible to handicapped individuals, she incurs an additional $11,000 for various features, such as ramps and widened doorways, to make her office building more accessible.The $11,000 incurred will produce a disabled access credit of what amount?

Accepted Answer

A) $0 
B) $5,000 
C) $5,125 
D) $5,500 
A) $0 
B) $5,000 
C) $5,125 
D) $5,500

Discuss the tax year in which an AMT adjustment is first required for an incentive stock option ISO).

Kerri, who has AGI of $120,000, itemized her deductions in the current year.She incurred unreimbursed employee business expenses of $8,500.Kerri incurs a positive AMT adjustment of $2,400 in computing AMT.

A LIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.

What is the relationship between the regular income tax liability and the TMT?

Mitch, who is single and age 46 and has no dependents, had AGI of $100,000 this year.His potential itemized deductions were as follows. What is the amount of Mitch's AMT adjustment for itemized deductions for 2018?

Steve records a tentative general business credit of $110,000 for the current year.His net regular tax liability before t general business credit is $125,000, and his tentative minimum tax is $100,000.Compute Steve's allowable general business credit for the year.

The AMT calculated using the indirect method will produce a different amount than the AMT calculated using the direct method.

Benita expensed mining exploration and development costs of $500,000 incurred in the current tax year.She will be required to make negative AMT adjustments for each of the next ten years and a positive AMT adjustment in the current tax year.

Without the foreign tax credit, double taxation would result when:

A small employer incurs $1,500 for consulting fees related to establishing a qualified retirement plan for its 75 employees.As a result, the employer may claim the credit for small employer pension plan startup costs for $750.

AMT adjustments can be positive or negative, whereas AMT preferences always are positive.

An employer's tax deduction for wages is affected by the work opportunity tax credit.

Madge's tentative minimum tax TMT) is $112,000.Her regular income tax liability is $99,000.Madge's AMT is $13,000.

Qualified rehabilitation expenditures include the cost of acquiring the building, but not the cost of acquiring the land.

Why does Congress see a need for a second tax system called the alternative minimum tax?

Which, if any, of the following correctly describes the research activities credit?

The standard deduction is allowed for regular income tax purposes, but is disallowed for AMT purposes.This results in a positive AMT adjustment.

Introduction to Taxation

Working With the Tax Law

Taxes on the Financial Statements

Gross Income

Business Deductions

Losses and Loss Limitations

Property Transactions: Basis, Gain and Loss, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Individuals As the Taxpayer

Individuals: Income, Deductions, and Credits

Individuals As Employees and Proprietors

Corporations: Organization, Capital Structure, and Operating Rules

Corporations: Earnings and Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multijurisdictional Taxation

Comparative Forms of Doing Business

Filters

Exam 17: Business Tax Credits and the Alternative Minimum Tax

Discuss the tax year in which an AMT adjustment is first required for an incentive stock option ISO).

Kerri, who has AGI of $120,000, itemized her deductions in the current year.She incurred unreimbursed employee business expenses of $8,500.Kerri incurs a positive AMT adjustment of $2,400 in computing AMT.

A LIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.

What is the relationship between the regular income tax liability and the TMT?

Mitch, who is single and age 46 and has no dependents, had AGI of $100,000 this year.His potential itemized deductions were as follows. What is the amount of Mitch's AMT adjustment for itemized deductions for 2018?

Steve records a tentative general business credit of $110,000 for the current year.His net regular tax liability before t general business credit is $125,000, and his tentative minimum tax is $100,000.Compute Steve's allowable general business credit for the year.

The AMT calculated using the indirect method will produce a different amount than the AMT calculated using the direct method.

Benita expensed mining exploration and development costs of $500,000 incurred in the current tax year.She will be required to make negative AMT adjustments for each of the next ten years and a positive AMT adjustment in the current tax year.

Without the foreign tax credit, double taxation would result when:

A small employer incurs $1,500 for consulting fees related to establishing a qualified retirement plan for its 75 employees.As a result, the employer may claim the credit for small employer pension plan startup costs for $750.

AMT adjustments can be positive or negative, whereas AMT preferences always are positive.

An employer's tax deduction for wages is affected by the work opportunity tax credit.

Madge's tentative minimum tax TMT) is $112,000.Her regular income tax liability is $99,000.Madge's AMT is $13,000.

Qualified rehabilitation expenditures include the cost of acquiring the building, but not the cost of acquiring the land.

Why does Congress see a need for a second tax system called the alternative minimum tax?

Which, if any, of the following correctly describes the research activities credit?

The standard deduction is allowed for regular income tax purposes, but is disallowed for AMT purposes.This results in a positive AMT adjustment.

Introduction to Taxation

Working With the Tax Law

Taxes on the Financial Statements

Gross Income

Business Deductions

Losses and Loss Limitations

Property Transactions: Basis, Gain and Loss, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Individuals As the Taxpayer

Individuals: Income, Deductions, and Credits

Individuals As Employees and Proprietors

Corporations: Organization, Capital Structure, and Operating Rules

Corporations: Earnings and Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multijurisdictional Taxation

Comparative Forms of Doing Business

Filters